Published in: Credit Cards | July 8, 2019

How to Find the Best Rewards Credit Card for You

With so many rewards cards out there, how can you find the best one for your situation? Find out in this helpful guide.

Woman with handful of credit cards
Image source: Getty Images.

Many credit cards not only let customers earn points or cash back for everyday spending but also offer ample additional benefits. You'll see generous sign-up bonuses for new customers, hotel room upgrades, airline lounge access, free checked bags, and more.

It’s great for cardholders to get so many perks just by swiping their card. But it's tough to find the right card that offers the very best rewards for you.

These questions will help you find the best rewards card for your situation.

How is your credit score?

Most of the cards offering the best rewards and perks are available only to people with good or excellent credit. If you don’t have a good credit score, you’ll be more limited in the cards you qualify for.

But you can still qualify for rewards cards that work for you: There are student credit cards and secured credit cards that offer rewards. So while you may not get the best cardholder perks, you'll get at least something back for the spending you do on your card.

Do you want to keep the same credit card for years?

If you’re OK with changing credit cards often, you should focus heavily on the sign-up bonuses available when choosing a rewards card.

Many cards give very generous bonuses to new cardmembers. You could get thousands of airline points good for hundreds of dollars in free travel, for example. Or your card issuer might match all the cash back earned in your first year.

New cardmember bonuses are so generous that it can make sense to sign up for a new card every year if you’re going to make big purchases. You might even sign up for cards more often than that. This strategy only works well if you're not worried about doing a little damage to your credit score.

Just be sure you can meet the spending requirements. The most generous bonuses often require you to spend $3,000 to $4,000 within the first few months of opening the card. See if the card has an annual fee and whether it’s waived the first year. If the card offers a bonus worth $750 but you have to pay a $450 fee for the card, you may decide it’s not really worth signing up for.

Do you mind being hands-on in managing your rewards program?

Some cards come with very generous rewards, like 5% cash back on certain categories of purchases. These cards often need more involvement from you than cards with simpler rewards programs.

For example, the card may offer 5% cash back on rotating bonus categories, but you need to activate the bonus category each quarter to get the extra cash back.

Other cards can give you great value for rewards points you earn, but only if you redeem for very specific things. Sometimes they're restricted to travel purchased through the card’s loyalty program or specific airlines. If you don’t mind going through extra hoops, these cards can definitely be worth it.

Do you prefer a more hands-off approach? You may be better off with a simple card that offers a reasonable flat percentage cash back. You won’t need to worry about activating your card bonuses and or figuring out which method of points redemption makes your points worth the most.

Do you travel often?

Many rewards cards focus on travel rewards. For example, you could earn free nights in hotels or points that you can redeem for miles. You could also get statement credits for travel purchases.

These cards can provide you with a lot of bang for your buck. But only if you travel enough to earn the maximum rewards and can redeem your points for flights or hotels. But be sure your travel card rewards the kind of spending you’re most likely to do. If you’re a roadtripper who stays in hotels, a hotel rewards card will be more valuable to you than an airline rewards card.

There are also lots of premium travel rewards cards that come with hefty annual fees but very generous perks. They might include free companion airline tickets, free checked bags, and access to luxury airport lounges where drinks and food are provided. These cards can be a great value if you book lots of trips each year. If you tend to stick close to home, they won't be as appealing -- a cash-back card could be a better choice.

What do you spend the most on?

Some rewards programs give bonus points or bonus cash back for different kinds of spending.

For example, some cards give you the maximum cash back for gas and groceries while others give you more cash back for hotel stays or airline tickets. Choose a rewards program that gives you the most rewards for the spending you do frequently.

How big of a spender are you?

There are lots of cards that charge annual fees for better rewards. However, for the additional rewards to make up for the fee, you’ll need to spend enough that your bonus rewards cover the fee -- and then some.

Take two cards: one with a $95 annual fee and another that’s free. Say the card with the $95 annual fee offers 3% cash back on gas and groceries and 1% back on everything else. The other card offers a flat 1% cash back on everything, with no fee.

The extra 2% you get back on gas and groceries needs to exceed $95 to justify the first card. So you’d need to spend at least $4,750 on gas and groceries to break even. If you exceed this spending amount, you’d be better off paying the fee to get better rewards.

Cards with big annual fees usually come with perks. If you’ll use those and they provide value, that reduces the amount you have to spend to make up for the fee and make the card worth it.

Now you know how to find the best rewards credit card for you

Finding the best rewards credit card takes effort. You need to consider

  1. which cards you can qualify for,
  2. whether it’s worth signing up for new cards to get sign-up bonuses,
  3. whether you’re willing to activate bonus rewards categories,
  4. whether travel-related perks are worth it,
  5. whether the rewards program matches your spending, and
  6. whether you spend enough to make paying an annual fee worth it.

By answering these questions, you can narrow down whether you should sign up for a simple cash-back card, a travel rewards card, or a card with a more generous rewards program that requires more effort.

There’s a great card out there for everyone. With a little research, you’ll find the perfect credit card for your needs. 

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